Volcker Rule likely a non-issue for securities lending and repo – FT/WSJ

From the Wall Street Journal:

U.S. regulators, in a draft of rules governing the Volcker rule, are proposing to carve out exemptions for so-called repo transactions and securities lending, the Financial Times reported Sunday on its website, citing a copy of the draft seen by the newspaper and confirmed by people familiar with talks between regulators.

In addition, regulators are proposing permitting the near-term trading in currency and commodities — but not futures, according to the draft.

According to the draft, the Volcker rule would exempt “positions arising under certain repurchase and reverse repurchase agreements or securities lending transactions (and) bono fide liquidity management.” Additionally, “positions in loans, spot foreign exchange or commodities” would be allowed.

The draft, dated last month, would impose a ban on short-term trading that might “significantly increase the likelihood that the banking entity would incur a substantial financial loss or would fail.”

The Volcker rule, named for former Federal Reserve chairman Paul Volcker, is part of the Dodd-Frank regulatory overhaul of the financial sector.

Full story at www.ft.com/intl/cms/s/0/313b2604-e20e-11e0-ba6e-00144feabdc0.html#axzz1YOfAbQ4n

An expanded WSJ article is here.

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